General Motors CEO Mary Barra Addresses Cadillac Hurdles

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Turning Cadillac into the American luxury powerhouse General Motors envisioned is proving to be rather difficult. As Reuters points out, Cadillac can’t find enough American buyers to trade their Mercedes or BMW in for a CTS or ATS, and its best-selling model, the Escalade, can’t be produced fast enough to meet consumer demand.

One Cadillac dealer in suburban Seattle is offering up to $12,000 off the sticker price of an ATS. Another dealer just outside of St. Louis is also offering steep discounts on the luxury sedans, including $17,500 off the sticker price of a CTS. Cadillac dealer Brad Brotherton said the brand made a commitment to relieve dealer inventories with incentives, something dealers had been requesting for a long time.

Reuters says the fire-sale at Cadillac dealers adds another hurdle to GM’s plan of challenging BMW and other luxury automakers. A luxury buyer might not mind a Cadillac, but the brand “has a relevance issue” and most shoppers simply don’t consider the brand when browsing for a new vehicle.

“The problem is, Cadillac is not BMW,” Larry Dominique, president of ALG in Santa Monica, California, told Reuters. “The ATS is the product that Cadillac could have used to build brand equity, but it was overpriced and overproduced.”

A company spokesperson said on Monday Cadillac had cleared 90 percent of the leftover 2014 ATS and CTS stock through subsidized leases, discounted financing and rebates. Dealers are offering $1,000 on the 2015 ATS and 2015 CTS, $4,000 on the 2014 ATS and $6,000 on the 2014 CTS. Some dealers are offring up to $7,000 off certain models.

On the other hand, Cadillac can’t produce enough Escalades. The model’s sales in January rose 149 percent year-over-year, and GM’s Arlington Assembly plant has been running three shifts and weekend overtime to try and match demand for the luxury SUV, along with GM’s other full-size products.

GM is probably delighted to see the new Escalade selling so well, but Cadillac CMO Uwe Ellinghaus says the model “does not set the direction” for the brand’s future. That consists of new small models, including a compact car and compact crossover, along with the CT6 full-size sedan, and eventually, a large flagship model.

“We understand we have a lot of work ahead of us with Cadillac,” GM CEO Mary Barra said.

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6 Comments

If they want to get the image going in the right direction and are using incentives, then I recommend any young , cool person on the lot get offered a VERY good deal. Everytime I see someone under the age of 50 driving a Caddy in Toronto I think it is a major score. My Wife and I were ambassadors with our ATS, we still are. My Wife is 32 and I guarantee people with ca shopping r on their mind will notice a young woman driving an ATS or CTS. Unfortunately, most of the ones on the road we see here are grey tops driving to the golf course.

When I bought mine, friends made jokes about how hard it will beto drive the narrow roads to our cottage and all sorts of BS. Our ATS started changing a lot of peoples minds. A close friend almost bought a new CTS at Christmas. It was his choice, but his Wife did not want to pay that much for what most people think of as an “Old Mans car”. So they got a Lexus.

BTW, nothing against older folks, but the brand needs to grow and get out of the “Ive done well in life retiree ” image and get the ” I am doing well now” people.

Where I live I also notice mostly old people driving late-model Cadillacs, which is ironic because Cadillac’s styling is definitely not conservative and that’s why I want one. You don’t see many cars like them on the road. I live in a small city which was a former textile factory town but is now economically depressed and has much poverty. There’s a serious lack of young professionals here so I figured maybe the city’s population being old would explain so many seniors with Cadillacs, but now that you tell me what’s happening in Toronto, apparently this trend is wider than I assumed. I liked an idea someone posted a couple months ago: Cadillac should pay a relatively young guy like myself (36 years old) to drive around and be seen in a CTS!

I own a 2010, CTS and like it a lot. This is my third one. And when I bought /leased the first one, I didn’t care who thought about my age….or socio/economic status. I got it because of its styling and performance.
All I can say is these cars are not as luxurious as they use to be with respect to materials used and how quiet, comfortable etc. they can and should be. But then, I won’t buy a foreign made car for my stables!
Most of the Asian models unlike many of the European models, are copied off of us any way. Over the years I have noticed this. They are the best copy-cats in the world!

Cadillac has an image problem ! The public doesn’t know what a CTS is or ATS . And I have always said that these two cars are over priced . Raising the cost of a car does not make it a luxury vehicle . And people are not going to pay that price when they can get something else that they see their neighbors driving that has brand equity . GM’s future plan to go to the CT nameplate is only going to confuse most customers . Now the Escalade it has an image for the brand , and as the article pointed out GM can’t build them fast enough . The customer knows what an Escalade is , and are willing to pay 80+ grand for one . Its a long road ahead for Cadillac .

Pricing too high, overproducing and deep discounting is a repetition of the past. Doesn’t anybody learn and all that further contributes to bastardizing the brand. I like some of the new V products but Cadillac isn’t a symbol of success. It’s an old farts car from a failed company which has declared bankruptcy just a few years ago. If you want to have an image of success, this brand doesn’t cut it and trying to rush things and failing again won’t help.

I have a 2011 CTSV Coupe and it is far more refined and capable than either my prior 2006 Audi S4 or 2008 BMW M3 – with one exception, something I would call material cohesion. Lots of high end materials, but no real flow / integration / theme.

My BMW I always thought was terribly pedestrian (old man feeling, if you will, despite its performance) as aside from the overly stiff suspension and M themed badging, nothing differentiated it from any other BMW. The S4 was a notch up in terms of material and had an overall suppleness that the BMW and Caddy lack, but was just a wee bit too boring.

The reason I bring this up, though, is that both BMW and Audi have picked a general “theme” and interior / handling / styling cues are carried over from year to year. Cadillac has chosen to be much more aggressive with each subsequent revision such that little translates from model year to model year. And while I applaud GM for rapidly searching to get things right, I also think that brand loyalty develops over years if not decades, and it partly because you can get in any Audi and pretty much know what to expect in terms of fit, finish, ride quality, and ergonomics. The same goes for BMW. You rarely have to “search” for anything.

But you get in 3 different models of a Caddy, and there is little beyond the exterior styling that has carried over. Add to that constantly variable interior quality (not all leather is the same) and a price that is pegged at those who already want to buy a Caddy and NOT at trying to steal away other brand loyal folks, and you have what you see here – a mish mash of successful platforms, but no over all shift and growth.

My advice – stop constantly reinventing things. Apply the same subtle improvements year over year to the inside that you have down with the large vehicle platforms (Silverado, Suburban, Escalade) and evolve. Finally – price things such that BMW, Audi, and Mercedes folks are incentivized to make a switch (and reward them with a great value when they do). And finally, build only enough to fuel demand, recognizing that many people don’t drive BMW, Mercedes, or Audi because they are better, they drive them because of the status. Caddy is building cars that are on par, but becoming a status symbol doesn’t happen over one night, or one model year . . .